Reply to: Latest misinformation

[QCApproved]

Indeed
This is a re-run on ATW's treatise on avoidance which is still smoking from being shot down last time out.
The main thrust being to establish a huge gulf in tax paid vis a vis ltd co avoidance and schemes where no such gulf really existed in individual and less so in absolute terms presumably to make him feel more secure about that avoidance scheme he uses/propounds.

Best expend all that energy on the future of contracting thread.

As a concerned taxpayer given that IR35 was unenforceable I now demand a retrospective levy on all ltd cos to address any tax that should have been collected but was otherwise not collected - irrespective of fairness, actual facts and circumstances and other "details".

Admin
I employed several contractors from a public sector background who missed the ample time it gave one to administer limited company affairs, at the taxpayer;s expense It helped sway people that their admin was taken care of as part of a package that appeared to offer certainty around the gilt edged dog's breakfast known as IR35
There was also a benefit of a reduced individual rate for tax returns as being part of the scheme collective, as well as assistance with mortgages etc - very much cheaply one might say.

[difficulttimes]

Not sure how many times you need to say it but there is NO POINT going after the scheme promoters.. most of them have closed up or done a runner and what good would it do?? Seriously get a life and get off this!

The ONLY satisfaction I will get is when we win at the FTT that we were operating within the taxation code at the time and HMRC may implement a 2019 silly tax charge but at least I know I wasn't doing anything wrong. That is my satisfaction.
Now please GO AWAY!!

[BrilloPad]

As has been observed by others in this thread, the evidence is out there. I'm clearly not going to change the view you have arrived at. Ultimately the arbiter will not be me or you of course, but the relevant authorities. I think therefore that I'll reserve my energies for them rather than continue a fruitless debate here.

Please don't feed the troll. Cheers.

[AtW]

Very aggressive towards the clients and former clients? yes.
Aggressive towards the promoters? haven't seen any evidence of this.

Very sadly that's the case. But what could they do? It was not and still isn't illegal to create these schemes even though in my mind they should have been treated as tax evasion in the first place.

I think it's the clients who should have aggressively pursued scheme promoters for misselling or anything else that would stick. Getting them bankrupt would at least give some feeling of revenge.

Pretty successful? I'd love to see some references (and please don't give me "Boyle")

If I was in charge of HMRC I'd define success as big decline in usage of tax avoidance schemes - there is far more money to be collected going forward, rather than backwards, but in order to ensure future collection they need to beat out whatever they can from past users to scare away people for good. I don't have hard evidence but I believe this is happening, so based on MY definition that is successful - one would have to be mad to get into a "scheme" these days.

It matters because HMRC is conducting a smear campaign directed at the clients in question in order to impose a narrative directly intended to help them sweep their 10+ years of inaptitude under the carpet.

So what's the smear bit in that campaign - that the users of registered tax avoidance schemes were tax avoiders? That's like stating the obvious really.

[DotasScandal]

Why does it matter if your clients had tax avoidance as primary motivation? Tax avoidance is legal, isn't it?

It matters because HMRC is conducting a smear campaign directed at the clients in question in order to impose a narrative directly intended to help them sweep their 10+ years of inaptitude under the carpet.

[DotasScandal]

HMRC is very aggressive and pretty successful at dealing with those schemes.

Very aggressive towards the clients and former clients? yes.
Aggressive towards the promoters? haven't seen any evidence of this.
Pretty successful? I'd love to see some references (and please don't give me "Boyle")

[AtW]

I agree it suits me commercially that most clients can argue that tax was not their MAIN motivation. I did however arrive at that conclusion a long time before my business started and tested the evidence BEFORE launching into the commercial operation. Your suggestion that I modelled a business around a lie (moreover a lie that was repeated by literally hundreds of people who probably didn't know each other) is perhaps more indicative of your wish to make good a belief that as far as I can see has no empirical evidence.

Why does it matter if your clients had tax avoidance as primary motivation? Tax avoidance is legal, isn't it?

People who go to a lawyer for defense would obviously say they are innocent or at least try to present their situation in most favorable light, that's expected - my point was that your job is defending them, rather than establishing the truth and then deciding whether to take their case or not, nobody expects that from a lawyer, but the point is that your view is biased towards your clients because it's your job to defend them.

I think therefore that I'll reserve my energies for them rather than continue a fruitless debate here.

Sure, good luck.

[DonkeyRhubarb]

The early schemes around 2001/2 were definitely IR35 motivated. Montpelier even named their scheme the "IR35 scheme".

Most people I know switched back to Ltd, after a couple of years or so, when it became clear that IR35 was pretty toothless.

[webberg]

Actions speak louder than words.

Who'd join a (registered) tax avoidance scheme and what would be their primary motivation?



No, you accept their VERSION OF EVENTS, which happens to suit you commercially.

You have no objective to find the truth - you are defending their position (however faulty it is) because it's your business.

Registered tax avoidance schemes included property schemes that are enshrined in the statute book and clearly intended by Parliament. The DOTAS rules were written to be as wide as possible and many investment and other structures were registered as a safety first option.

I accept a "version of events" that I hear consistently from many different sources. That is called believing the evidence.

I agree it suits me commercially that most clients can argue that tax was not their MAIN motivation. I did however arrive at that conclusion a long time before my business started and tested the evidence BEFORE launching into the commercial operation. Your suggestion that I modelled a business around a lie (moreover a lie that was repeated by literally hundreds of people who probably didn't know each other) is perhaps more indicative of your wish to make good a belief that as far as I can see has no empirical evidence.

As has been observed by others in this thread, the evidence is out there. I'm clearly not going to change the view you have arrived at. Ultimately the arbiter will not be me or you of course, but the relevant authorities. I think therefore that I'll reserve my energies for them rather than continue a fruitless debate here.

Happy to do so via PM if you wish, but I think the other readers here have had enough.

[AtW]

Sorry I can' t be exact. But I think the incentive to go either Ltd Co or scheme user was considerable?

The incentive to join a scheme HAD TO BE very considerable to all other options, certainly Ltd even after service fees were taken into account.

Otherwise very few people would bother to take obvious extra risks and strange things like loans.

[Fred Bloggs]

Just to recap, as I seem to remember it in the early-ish 2000's - I think there was a zero % band for the first £10k of Ltd Co profit. I think Corp Tax was around 22% (?) ERNIC was around 12% (?) and EENIC around 11% (?). Basic rate tax was still 20% (IIRC?). Higher rate tax was 40% + 1% extra NIC.

So, there was a fair incentive to be outside of IR35 and avoid NIC's for Ltd v IR35.

My (fairly sketchy) understanding is that a typical scheme paid PAYE tax on ~£20k salary and paid the remaining ~£80k (typical) tax free But subjected the whole lot to an admin fee of ~10% of the total.

Sorry I can' t be exact. But I think the incentive to go either Ltd Co or scheme user was considerable? The fly in the ointment is the scheme providers fees which it turns out was money down the pan.

[AtW]

So why take the chance of switching to a tax avoidance scheme for the marginal difference?

Right now there isn't because HMRC is very aggressive and pretty successful at dealing with those schemes.

I don't agree with you that the difference was marginal - if it truly was then nobody would have taken those crazy loans instead of real money, clearly the "marginal" difference was high enough to tempt a fair few people.

What I don't understand why you can't honestly say that (obviously) tax avoidance scheme members were there for tax avoidance. Tax avoidance is legal, isn't it? You've already said that tax stuff got nothing to do with morals, so why not be honest about it???

[webberg]

You seriously want to compare cash in hand without tax with frozen pension contributions which you may never live to see? It's not like for like.

I think if you do the numbers (hard evidence I know which is always so inconvenient) and compare "take home" from operating via a limited company paying CT, some VAT loss perhaps, PAYE on salary and perhaps some higher rate on dividends plus some loans from the company at whatever rate was applicable plus admin costs plus secretarial etc with operating via a "tax avoidance" scheme, allegedly verified as legal, compliant and effective, but with significant fees to promoters etc then the difference is not so great.

So why take the chance of switching to a tax avoidance scheme for the marginal difference?

Surely in that instance there has to be motivation beyond the tax saving?

[AtW]

An "obvious truth"? I'm not so expert in judging the mind set of people working in a sector that I've never worked in and instead tend to rely upon conversations I've had with such people.

Actions speak louder than words.

Who'd join a (registered) tax avoidance scheme and what would be their primary motivation?

I only wish I had a monopoly on the truth as you apparently do.

I accept the truth as relayed to me by people who were there.

No, you accept their VERSION OF EVENTS, which happens to suit you commercially.

You have no objective to find the truth - you are defending their position (however faulty it is) because it's your business.

[webberg]

It's the truth and you know it..

I only wish I had a monopoly on the truth as you apparently do.

I accept the truth as relayed to me by people who were there.